10 Credit Report & Credit Score Myths

I was honored be a speaker at the Wi$e Up & Take Off conference sponsored by the Department of Labor Women's Bureau here in the Bay Area last Friday. It was a great program, covering everything from estate planning to overcoming money fears in this tough economy. My presentation was called "Credit Myth Busters." We covered sixteen of the most common credit myths with a fun "true or false" format. 

In case you missed Credit.com at the conference, here are ten of the most common credit myths:

1. Does it hurt your credit score to check your credit reports?  No! Checking your own credit doesn’t count as a "hard inquiry."

2. Your income and age aren't considered on your credit? True! Credit reports don’t include information on your income, age, gender, religion, or race.

3. Do the credit bureaus share information? Are all three of your credit reports the same? No! The credit bureaus do not share data with each other. It's common to have different information on each of your credit reports.

4. Does your bank account and ATM card help your credit? No! Credit reports do not include information on your checking or savings accounts. Using an ATM card with a Visa or MasterCard logo doesn't build your credit.

5. Does paying off a negative record – such as a collection account – remove it from your credit report? No! Collection accounts stay on your credit reports for 7 years from the last 180 day late payment on the original account before it was sold. Paying the account doesn't remove it from your report.

6. Does it hurt your credit to close old credit cards and accounts? Yes! Closing old credit card accounts can hurt your credit scores by reducing your credit limits and your credit age.

7. Can you ruin your credit by applying for too many accounts? No! Inquiries only account for 10% of your credit score.

8. Is it possible to get a perfect 850 credit score? Yes! You'll need 7-10 years of perfect credit behavior.

9. Does it matter how you use your credit cards as long as you make the payment on time and aren't maxed out? Yes! Charging more than 10% of your total credit limits can also have a significant negative impact on your credit scores.

10. Is a short sale better for your credit than a foreclosure? No! Short sales and foreclosures have the same negative impact on your credit. 

What's a common credit myth you've heard recently? Share it in the comments section below.

Emily Peters – Credit.com's personal finance expert and former TransUnion credit bureau insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.

Comments

[Jeffrey]

I get asked a lot about whether paying rent, cell phone bills, and having a checking account helps to build credit. Sorry, it helps build character and makes you a responsible adult, but doesn't factor into your FICO score or your Chexsystems file unless you screw up.

[Joseph]

Does it ever occur to anyone reading these "reports" that they are generated by the credit card companies and their lackeys? It's all done to perpetuate a system that would crumble if you weren't paying them these exorbitant interest rates. Here's a thought; Try saving up for things and buying them in cash and (wonder of wonders) you won't need the credit leeches at all. Don't buy into this mythology.